Correlation Between Rivian Automotive and GMS
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and GMS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rivian Automotive and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and GMS Inc, you can compare the effects of market volatilities on Rivian Automotive and GMS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rivian Automotive with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and GMS.
Diversification Opportunities for Rivian Automotive and GMS
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rivian and GMS is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Rivian Automotive is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rivian Automotive are associated (or correlated) with GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and GMS go up and down completely randomly.
Pair Corralation between Rivian Automotive and GMS
Given the investment horizon of 90 days Rivian Automotive is expected to under-perform the GMS. In addition to that, Rivian Automotive is 2.62 times more volatile than GMS Inc. It trades about -0.02 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.21 per unit of volatility. If you would invest 8,297 in GMS Inc on September 6, 2024 and sell it today you would earn a total of 1,932 from holding GMS Inc or generate 23.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Rivian Automotive vs. GMS Inc
Performance |
Timeline |
Rivian Automotive |
GMS Inc |
Rivian Automotive and GMS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rivian Automotive and GMS
The main advantage of trading using opposite Rivian Automotive and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, GMS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GMS will offset losses from the drop in GMS's long position.Rivian Automotive vs. Volkswagen AG Pref | Rivian Automotive vs. Volkswagen AG 110 | Rivian Automotive vs. Porsche Automobil Holding | Rivian Automotive vs. Bayerische Motoren Werke |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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